An Unpersuasive Defense of Judge Sotomayor's Ruling in the Didden Case:

Daniel Hemel has published in Forbes what I think is an unpersuasive defense of Judge Sonia Sotomayor's ruling in the Didden case, which I criticized here. In that case, a the Village of Port Chester condemned a property when the owners refused to pay $800,000 to the city's designated developer for the area. For reasons I explained in the earlier post, this case goes beyond even Kelo v. City of New London in licensing the condemnation of private property for the benefit of other private interests.

Hemel, however, has a different take on the facts that he claims justifies the decision:

According to Didden [one of the owners of the condemned property], G&S chief Gregg Wasser demanded an $800,000 payment or else he would have the village condemn the land and hand it to G&S. The village did indeed condemn the property the next day, although it paid Didden $975,000 in compensation. Didden sued the village in U.S. District Court, lost and appealed the case....

Wasser's $800,000 offer came at a November 2003 meeting with Didden and his business partner Domenick Bologna. The attendees do not agree on what happened at that session, but Wasser's account appears to be--at the very least--a plausible one. Wasser says he told Didden and Bologna that "it would be a waste of time for the lawyers to argue over who had 'better' rights to proceed with their project" and that the parties should settle the matter themselves.

According to court documents, Wasser estimated that the winner of the dispute would make a $2 million profit but that "whoever would be responsible for completing the project should be given some credit and was entitled to more than a 50-50 split." He said that whichever party proceeded with its drug store plans should pay the other $800,000, and he added that he was willing to take either end of the deal.

In retrospect, Wasser's offer appears to have been quite generous because he had strong reason to believe that he would win in court (as he ultimately did).

While Didden's backers say that Wasser's offer was extortion, it looks like it might have been an innocuous settlement proposal--standard fare for legal disputes. Unless Didden and Bologna could prove their side of this "he said, he said" spat (and they could not), Judge Sotomayor was correct to conclude that Wasser's "voluntary" attempt to settle the dispute "was neither an unconstitutional exaction in the form of extortion nor an equal protection violation."

There are two major problems with Hamel's defense of Sotomayor's ruling. First, the case was at the stage where the court was considering the Village's motion to dismiss under Federal Rule of Civil Procedure 12(b)(6) for "failure to state a claim for which relief can be granted," which means that the Village was moving to dismiss the case without sending it to a jury because the owners didn't have a case even if their version of the facts was correct. When considering a 12(b)(6) motion, federal courts are required to assume that the plaintiffs' version of the facts is correct unless it can be "proven beyond doubt" that it isn't. If the suit really did hinge on a "he said, he said" dispute as Hemel suggests, the panel should have sent the disputed factual issue to the jury for adjudication. One of the most troubling aspects of the appellate panel's ruling is that they apparently concluded that Didden and Bologna had no case even under the assumption that they were telling the truth.

Second, Wasser's proposal was extortionate even if he was telling the truth. If Wasser's version of events is correct, he in effect gave Didden and Bologna two options: pay him $800,000 or 50% of the proceeds of their project for the right to proceed with the construction of a CVS on their land or transfer the land to him in exchange for an $800,000 payment from Wasser. Hamel claims that the inclusion of this second option makes the offer nonextortionate and even "generous." It was no such thing. As Hamel himself notes, the land was worth at least $975,000 (the amount the city paid Didden and Bologna as compensation for the taking). Thus, Hamel's alternative offer was an offer to pay the owners $175,000 less than they could get even in an eminent domain proceeding (which often end up undercompensating owners).

If Wasser's account is correct, he simply made two different extortionate offers, using the threat of eminent domain as leverage; his "generosity" consisted of letting the victims choose between the two unsavory options. One can characterize this is as a "settlement proposal" which is "standard fare for legal disputes." But there would have been no "legal dispute" in the first place if not for Wasser's threat to have the property condemned unless his demands were met.

If a Mafia don comes to you and says that he will break your legs unless you either 1) pay him $800,000, or 2) sell him your land at a price well below market value, that would surely be extortion. Wasser's "generous" offer was exactly the same, except that his leverage was based on the threat of condemnation rather than breaking the owner's legs. If this is not extortion using the threat of eminent domain as leverage, it's hard to see what would be.

In sum, Hamels' analysis fails to justify Judge Sotomayor's extremely dubious decision in Didden. If anything, it highlights her failure to properly apply the relevant legal standard in this important case.

UPDATE: It is worth noting that neither the district court decision (which Sotomayor's Second Circuit panel affirmed without any changes), nor the appellate opinion itself make any mention of the additional offer by Wasser that Hamel stresses in his op ed. That suggests that neither considered it relevant to the outcome of the summary judgment motion or (less likely) that they thought that Wasser's version of events wasn't credible enough to warrant consideration. Both opinions can be found in the appendices to the property owners' unsuccessful cert petition to the US Supreme Court.

UPDATE #2: I have changed around some of the wording of the original post in order to make a couple points clearer and make a few phrases flow better. I have not changed any of my substantive points, so I won't catalogue these stylistic changes in detail.

UPDATE #3: As commenters point out, the plaintiffs' case was actually dismissed under Federal Rule of Civil Procedure 12(b)(6) for failure to state a cognizable legal claim, rather than an ordinary summary judgment motion. I was remiss in not noting this in the original post. However, this fact actually weakens Hemel's argument further, since under Rule 12(b)(6), a court must assume - for purposes of ruling on the motion - that the plaintiff's version of the facts is true unless it can be proven false beyond doubt. I have amended the original post to reflect this fact.

UPDATE #4: In an e-mail to me Daniel Hemel cites court documents indicating that Wasser's alternate offer to Didden and Bologna was to by the land for $800,000 plus "fair market value" (this point was not noted in Hemel's original op ed). I thank Mr. Hemel for the clarification. Even this offer, however, would still be extortionate and far from "generous." Assuming that the "fair market" value noted in the offer was comparable to the $975,000 eventually paid in eminent domain compensation by the government, Didden and Bologna would have ultimately received $1.775 million if they had accepted the proposal. However, they would have lost some $2.975 million in exchange: the fair market value plus the $2 million Wasser estimated as the expected profits from the CVS Didden and Bologna had planned to establish on the site. Thus, Wasser's most "generous" offer was in effect a proposal to take $1.2 million from the owners, using the threat of eminent domain as leverage. This is even less "generous" than his alternative demand for a straight-up payment of $800,000 in exchange for being allowed to keep the land and proceed with the CVS, which everyone recognizes would be extortionate if proposed separately.

There's a lot I disagree with here, but the most obvious one is that the difference between -$800,000 and $975,000 isn't $175,00, but $1.775 million. Your comparsion between the $800,000 settlement number and the $975,000 value of the condemned land is an apples/oranges comparison.

The worse thing about it is that Wasser was negotiating for his own interests but using the apparatus and authority of the state to buttress his position. It shouldn't have been an imminent domain civil case, it should have been a federal corruption case even if the facts were as Wasser alleged.

You really think it is ok for well connected people to use government force to seize someone else's propery, just as long as they pay the appraised value - and what the original owner wanted/planned to do with their property is of no matter?

Ilya, Jim Copland makes an important and correct point that should lead you to modify the text of your post. Didden was not at the summary-judgment stage. The district court granted a 12(b)(6) motion. See 322 F. Supp. 2d at 387; id. at 388 ("The factual allegations in the complaint are presumed to be true, and all reasonable inferences are drawn in the plaintiffs' favor."). As Jim Copland points out, this fact makes your point stronger, not weaker.

I agree with Justin. The way I understand the case (and I admit I haven't read it in any detailed fashion), Didden would have gotten 800K plus the appraised value of the land; i.e. $1.775M. Thus, it is inaccurate and misleading to compare the settlement number and the appraised value of the land as if they were "either/or".

To all those claiming that Sotomayor should have sided with Didden because it was at the motion to dismiss stage: the case was dismissed on procedural grounds. Didden failed to contest the condemnation within the three-year statutory periodl; thus, Sotomayor did precisely what conservatives say she should be doing: following the law, even if it seems to lead to an unjust result. Four federal judges (one district court and three appeals judges) came to the same conclusion.

No, Didden (in retrospect) had a choice of giving $800,000 and keeping the land,*or* receiving $975,000 and losing the land. The difference is $1.775M, which is slightly less than $2 Million, fwiw.

And rereading it, I missed that Ilya was talking about the alternative offer, which was the idea that he would get $800,000 for the land. That indeed was a settlement offer that was less than the judgment by $175,000. My mistake.

Ilya, Jim Copland makes an important and correct point that should lead you to modify the text of your post. Didden was not at the summary-judgment stage. The district court granted a 12(b)(6) motion. See 322 F. Supp. 2d at 387; id. at 388 ("The factual allegations in the complaint are presumed to be true, and all reasonable inferences are drawn in the plaintiffs' favor."). As Jim Copland points out, this fact makes your point stronger, not weaker.

Exept for the fact that after Iqbal and Twombly, no one really knows. Apparently, if the goal is to get some government agents or big business off the hook, anything goes.

Given what the circuit court had to rule on the inescapable conclusion that in no circumstances can threat of use of ED become extortion. The question of reasonableness could not have been a factor in the court's decision, the only matter was the law and what constitutes extortion - it would not have been extortion if Wasser had offered $1.00 instead of $800,000. Hemel seems to have missed what the court issue the court was ruling on.

Yeah he had to pay protection money to Wasser just to build something on property he already owned *or* have the property taken from him, and he would be paid less than 1/2 of the potential profit to be made if he could build the drugstore he was planning to build already.

No. I just reread the opinion (available at one of the links in prior Ilya's post) and it says, verbatim,

Based on the $2 million profit figure, Wasser
proposed a buy-out figure of $800,000, in addition to the
fair market value of the property, to be divided among
Plaintiffs Didden, Bologna and DeCesare. He said he
would be just as happy being bought out by Plaintiffs at
that figure as he would be to buy Plaintiffs out.

(emphasis added)

Dist. Ct. App. 29.

Thus, Didden could have gotten $800K plus the fair market value of the property (which I assume is roughly equal to the appraised value of the land, i.e. $975K).

PS, after reading the facts (as admittedly described by Hemel), what is sort of missing from the facts as described by Ilya is pretty important, IMHO. That is, the developer put forth a comprehensive plan, one that included condemnation of a series of plots and also included the buidling of a Walgreens in a particular spot, let's call it Plot 1. The owners of Plot X (which partially but not fully encompassed Plot 1), at the last minute (and after the statute of limitations for objecting to the condemnation and the redevelopment plan) objected to the condemnation on the grounds that they could build a CVS instead. This would have required a new redevelopment plan (since the locations were not the same).

To call this an extortion requires one to rearrange all the facts in a different chronological sequence.

But on reflection, it also ignores another It also requires one to ignore that the attempt to put a CVS on that location (and reap the $2 million profit) was only made available to Didden by the condemn-and-redevelopment plan. So not only was Wasser not trying to arrange an extortion (it would require him to be somewhat of a profit to have anticipated the last-minute objection by Didden), the Didden plaintiffs were trying to freeride on the very comdemn-and-redevelop plan that Ilya believes should not be constitutional in the first place.

If Tugh is right, that really does look like a fair settlement offer, and a lot more than the Didden plaintiffs would have received had Wasser simply refused to discuss the matter with the Didden plaintiffs in the first place. Not much of an extortionist, that Wasser.

There's a lot I disagree with here, but the most obvious one is that the difference between -$800,000 and $975,000 isn't $175,00, but $1.775 million. Your comparsion between the $800,000 settlement number and the $975,000 value of the condemned land is an apples/oranges comparison.

If the expected value of development was $2 million, then Wasser's 50% vs. $800,000 would have left Didden with $1-1.2 million. That $200,000 range is a risk premium of sorts. The $975,000 looks therefore to be an underpayment relative to Wasser's offer (depending on the length of time to project completion, Didden's discount rate, and Didden's risk preference). As Ilya notes, that's hardly atypical in eminent domain.

I think that the real problem with the Hemel piece is it misses the main point: the town's decision to take Didden's property and give it to Wasser -- for exactly the same development purpose -- hardly qualifies as a public use, even under Kelo. Sotomayor's order (and as she was the senior active judge on the panel, under Second Circuit practice, it almost certainly emanated from her chamber) merely cites without analysis the following language from Kelo:

Just as we decline to second-guess the City’s considered judgments about the efficacy of its development plan, we also decline to second-guess the City’s determinations as to what lands it needs to acquire in order to effectuate the project.

But the whole point here is whether the City's judgment was merely pretextual, and the summary order doesn't begin to consider that question. In that respect, it's good that it was issued as a summary order, since it thus has no precedential value. Most charitably, the decision not to publish an opinion could be read precisely to avoid publishing any in-depth Fifth Amendment analysis with precedential value, given the panel's belief that the case was time-barred.

To say that that case was resolved on procedural grounds is literally true but doesn't tell the whole story. The district court and court of appeals held -- in a ruling of great substantive consequence -- that the three-year statute of limitations started to run on July 14, 1999, when Didden's property was made part of a "redevelopment area" POTENTIALLY subject to condemnation. According to the complaint, it was in November 2003 that Wasser demanded $800,000 not to condemn Didden's property. Didden filed suit in January 2004.

If the alleged demand of $800,000 not to condemn the property was actionable, it makes no sense to say that the statute of limitations had expired before the demand was ever made. To reach the "procedural" conclusion the district court and court of appeals reached, the courts had to reach or at least assume the substantive conclusion that no new and legally actionable harm occurred when the alleged demand for payment was made. It's a pretty big deal.

It is true that four federal judges all reached the same conclusion. The same could be said about the case of Bobbie v. Bies, which the Supreme Court reversed in a 9-0 opinion yesterday. The unanimity of a number of federal judges is a good indicator that they were probably right, but it is hardly a conclusive indicator that they were right.

Yeah,it doesn't seem like any extortion whatsoever. It also explains (for me) why none of the federal judges saw it as an extortion. I believe the correction to Ilya's post is warranted since his depiction of choices that Didden faced is factually wrong.

Roy,
I think that the finding that the statute of limitation started to run when Didden's land was declared as potentially subject to condemnation is correct. The beef of Didden's argument is that the taking was not for true public purpose. However, the finding of public purpose was made in 1999. Thus, while it is true that the actual harm (i.e. taking) didn't happen till much later, Didden was perfectly aware that the public purpose finding was made years ago, and had all this time to file a lawsuit. That he didn't, leads me to believe that in the course of his attempt to get a project himself, he was unsuccessful in negotiating with another side. The other side made him a legitimate offer which he declined. He has noone to blame but himself, I think. I agree that it seems a bit unseemly that Wasser was acting in a dual capacity, but it hardly warrants outlandish comparisons with mafia and extortions.

To all those claiming that Sotomayor should have sided with Didden because it was at the motion to dismiss stage: the case was dismissed on procedural grounds. Didden failed to contest the condemnation within the three-year statutory periodl; thus, Sotomayor did precisely what conservatives say she should be doing: following the law, even if it seems to lead to an unjust result. Four federal judges (one district court and three appeals judges) came to the same conclusion.

Except that the "three-year statutory period" was ridiculously defined, such that Didden had to sue before he had suffered any damages at all! The judges' decision made no sense, and seemed -- just as in the Ricci summary affirmance -- an attempt to hide the ball.

In any case, the second circuit ruled on alternative grounds that the property seizure was perfectly legal.

At the 12(b)(6) stage, I could see how this case (if filed timely) could proceed, Jim.

But at the Summary Judgment phase, this case is all but over. For the redevelopment plan to be a pretext under Didden's theory of the case, the City would have had to have been prescient about the events of November 2003 (as described above) by July 14, 1999, when they approved the redevelopment plan that on its face would require the condemnation of the Didden property. I'm not sure what evidence would tend to show that the City's approval of the July 14, 1999 redevelopment plan was simply a pretext (or alternatively, that Wasser's proposal for the redevelopment plan was pretext for some extortion scheme). The subsequent condemnation was simply pursuant to that redevelopment plan - so the argument for pretext there is flat nonexistant.

And given how implausible the factual scenario seems, I could also certainly see an argument that 12(b)(6) dismissal would thus be warranted under Twombly.

PS - since the complaint was filed before Kelo, do we know that the complaint actually alleged pretext? Just curious. Don't think a 12(b)(6) complaint can look to the opposition to the Motion to Dismiss to create necessary allegations.

I think that the finding that the statute of limitation started to run when Didden's land was declared as potentially subject to condemnation is correct.

How do you figure? A potential condemnation sounds a lot like a potential injury, not an actual one. How on earth could their claim be ripe at that stage? What if the developer (er, sorry, the "town") never went ahead with the condemnation?

It could be under Twombly and other cases if the facts alleged rise to a certain level of logical implausibility or vagueness. Given the chronology of the case, and that (I assume on the face of the allegations itself, but certainly facts to which the judge can take judicial notice of) the city made a decision fully evidencing its intent to condemn the land over four years before the alleged extortion, that certainly seems possible here.

Didden was a pre-Twombly decision and had nothing to do with the "plausibility" of the complaint's allegations. As for just what the complaint alleged, here is what APPELLEES' brief defending the dismissal of the action before the Second Circuit said (emphasis in caps added): "Plaintiffs allege that G&S demanded $800,000 or a partnership interest in Plaintiffs' CVS project or else G&S would proceed with its project, INCLUDING THE CONDEMNATION OF PLAINTIFFS' PROPERTIES within the MUR District." The next sentence of the brief states appellees' contrary version of the facts, but nowhere does the brief dispute the bedrock proposition that, at this stage of the litigation, the court of appeals was required to accept plaintiffs' allegations as true for purposes of the motion to dismiss. And, as appellees' own brief demonstrates, those allegations included the allegation that the condemnation of Didden's property hadn't yet occurred but would occur soon if Didden didn't pay $800,000.

It's very hard to see how the statute of limitations could have already run IF that version of the facts is taken as true.

"And, as appellees' own brief demonstrates, those allegations included the allegation that the condemnation of Didden's property hadn't yet occurred but would occur soon if Didden didn't pay $800,000."

Yeah, sure. That's what a monetary settlement over a non-damages lawsuit is, of course. I don't think a Judge has to ignore the chronology, or the express legal reason for why Didden's property would be condemned - ie, the 1999 redevelopment plan.

And all I said regarding Twombly is that while it seems like that absent the SOL argument I agreed that the case should have probably waited until SJ to be disposed of and decided in that way, that in retrospect at this time, a 12b6 dismissal could be warranted. My point was ancilliary, and independant of what the DJ did.

I see it's already been pointed out, but it bears repeating -- the District Court dismissed Didden's claims on a Rule 12(b)(6) motion - a motion to dismiss for failure to state a legally cognizable claim. Unlike on summary judgment motions under Rule 56, where the Court is presented with summary judgment proof and is supposed to decide whether or not there is any legitimate dispute on any material issue of fact, a District Court in considering a 12(b)(6) Motion to Dismiss is supposed to assume the truth of the factual matters asserted in the Complaint and decide whether or not, IF EVERYTHING THE PLAINTIFF CLAIMS IS TRUE, the Plaintiff has asserted a legally cognizable claim. Since Didden asserted in his Complaint that the $800,000 demand by Wasser was pure extortion, what Wasser claims to be the case is simply irrelevant in the consideration of a Rule 12(b)(6) Motion. Hemer's defense of the ruling based on Wasser's side of the story either displays an appalling ignorance of the legal standards applicable to a Motion to Dismiss for Failure to State a Claim (a mistake that should not ber made by anyone who received a passing grade in Civil Procedure during their 1st year in Law School), or a willful attempt to mislead his public. I strongly suspect that it is the latter.

PS, if anyone is trying to mislead the public, its those who are trying to portray this is as a situation in which there was no redevelopment plan, just someone given carte blanche power to condemn lands at his pleasure, and then he approached the Didder plaintiffs with a threat to expropriate their land intended for some already-planned CVS if he didn't pay up.

Does this discussion remind anyone of the opening of the Hitchhiker's Guide to the Galaxy? (With the Vogons taking no truck with protests against demolishing Earth as the demolition plans had been on file at Alpha Centauri for 50 years?)

Anyway, it does strike this non-lawyer as a rather devious reading of the law and the facts to suggest that by the time the harm is demonstrated your statute of limitations has already run out.

So, what would Didden have sued for before the actual condemnation? Does just being placed in a "Redevelopment Area" constitute a taking for legal purposes, and would courts in general, or these judges in particular, have gone along with that?

To all those claiming that Sotomayor should have sided with Didden because it was at the motion to dismiss stage: the case was dismissed on procedural grounds. Didden failed to contest the condemnation within the three-year statutory periodl; thus, Sotomayor did precisely what conservatives say she should be doing: following the law, even if it seems to lead to an unjust result. Four federal judges (one district court and three appeals judges) came to the same conclusion.

Frankly, the argument that Didden had to sue before he ever got notice that HIS land was being condemned is ridiculous. Yes, there was a designation of a "Redevelopment Zone" by the City more than three years prior to the dispute, but that designation DID NOT specify which, if any, property was to be condemned; indeed, the City retained the right to approve any redevelopment by existing landowners. Indeed, the City of Port Chester could have approved Didden's request to develop the CVS Pharmacy when he requested it, they were under no obligation to defer to Wasser, and no suit would have been necessary. If Didden HAD sued immediatedly after the designation of the Redevelopment Zone, or really at any time prior to the City of Port Chester's denial of his development request, any fear that he had that his land might be condemned would be purely speculative, and the suit almost certainly would have been tossed based on the ripeness doctrine.

Due Process requires both notice and a reasonable right to respond; in this case, Didden had no notice that his property would be stolen (yes, I think that is the appropriate word, even if he was paid for it) until he was served with condemnation papers. The District Court's ruling on timeliness, and the 2d Circuit panel's affirmance on this issue, run roughshod over the concept of reasonable notice and an opportunity to respond, required by Due Process. So no, Tugh, Sotomayor was most certainly NOT applying the law, she was twisting the law into knots to deny a litigant a fair hearing.

Respectfully, your revisions are incomplete and the post is still misleading in this section:

Second, Wasser's proposal was extortionate even if he was telling the truth. If Wasser's version of events is correct, he in effect gave Didden and Bologna two options: pay him $800,000 or 50% of the proceeds of their project for the right to proceed with the construction of a CVS on their land or transfer the land to him in exchange for an $800,000 payment from Wasser.

This is just plain wrong. The option (b) was to obtain the $800,000 payment in addition to the fair market value of the land. See the District Court discussion, App. 29.

In sum, Hamels' analysis fails to justify Judge Sotomayor's extremely dubious decision in Didden. If anything, it highlights her failure to properly apply the summary judgment standard in this important case.

Still nobody has provided any facts suggesting that the landowner wasn't paid fair value. If you will note above, Ilya notes that landowners actually usually get OVERPAID in such situations.

actually, I said the exact opposite, that eminent domain usually undercompensates the owner. In any event, the dispute was over whether the use of eminent domain was legally permissible at all, not about the compensation amount.

actually, I said the exact opposite, that eminent domain usually undercompensates the owner. In any event, the dispute was over whether the use of eminent domain was legally permissible at all, not about the compensation amount.

sorry I misread.

In any event if the guy got fair value, who cares. It was just a commercial property.

There's a lot I disagree with here, but the most obvious one is that the difference between -$800,000 and $975,000 isn't $175,00, but $1.775 million. Your comparsion between the $800,000 settlement number and the $975,000 value of the condemned land is an apples/oranges comparison.

The comparison is exactly on point. Wasser claims he offered to pay $800,000 in exchange for the property. This is precisely $175,000 less than the owners eventually got when the property was condemned. If they had paid him $800,000 to be allowed to keep the property (as per his other proposal), the situation would have been different, true. In that scenario, the owners would have less money, but would still have the land.

Have you read the case? The District Court opinion meticulously catalogs all the facts, from the finding of public purpose in 1999; selection of Wasser as the "preferred developer"; Didden's unsuccessful attempts to contest this designation; failed negotiations between Didden and Wasser; and finally the lawsuit. In short, Didden had ample notice and time to respond; he could have well sued if he believed that the finding of public purpose was in error; he didn't. He should not be allowed to get the benefit of trying to commercially exploit the finding of the public purpose and, when it failed, challenge the finding of the public purpose that enabled him to get the evry generous offer that he refused. So, DiverDan, yes, Sotomayor was most certainly applying the law, rather than twisting it to benefit the unsuccessful businessman.

Properly chastised, I read the 3 opinions relevant to the case. I think the SOL question is close, without further inquiry I don't feel competent to give an opinion. I can see both sides.

As far as the "Extortion" allegation, it seems (and I don't have the complaint) that at least at the trial level, the allegation was only incidental to their claim, in that they argued that there was no public purpose for the propose for the taking because of the alleged extortion. Since the test for public purpose was found by the District Court to be one of "rational relation," and under the 1999 plan there was a clear relationship between the taking (for building a pharmacy) and the redevelopment plan, that was all the analysis that was necessary.

In other words, the Court didn't have to address the extortion because "pretext" wasn't properly alleged under the proper legal standards - ie, Plaintiffs never alleged, as they would have needed to, that the 1999 redevelopment plan which included the taking of the Plaintiffs' claim (as well as any amendments to that plan which did not otherwise alter the strategy to take the Plaintiffs' land) was simply a pretext to extort money from Plaintiffs. Instead, they argued that the the triggering event was the alleged extortion/settlement negotiations.

Because the Court did not find this the appropriate trigger, it did not need to address the allegations.

I don't have the Complaint, but I can't see where the District Court or the 2nd Circuit made some sort of willful error regarding the standard of revieew under 12(b)(6). If someone wants to furnish the Complaint, that could help.

This case seems like a great example of why we should not rush to judgment. When I first heard of this case in the media, I was appalled. But nowhere in any of the media's stories was it mentioned that the case was decided on a SOL basis. That is a *HUGE* issue (regardless if whether or not you agree with the ruling), and one that really should have been emphasized along with the rest of the story.

Would I have decided the same way, if I were a judge? Maybe not. (I have no way of knowing, without seeing, reading, and hearing all the evidence that the trial court did.) If I were sitting as an appellate judge, would I have found the same way *all* 3 judges did? Maybe not. (Again, no way to tell, without seeing everything the ct. of appeals did.).

But the actual facts of the cases certainly show the idiocy of painting Sotomayor as a rogue judge in this case. When every judge that heard the case at lower levels agreed, that does suggest that their reading was, at the very least, not totally bizarre.

Maybe this is slightly off-topic, but it's also interesting to see that Sotomayor's ruling was deferential to the government, and a clear example of her refusing to rule in favor of the most sympathetic party, when she felt the facts favored the less-sympathetic side. Conservatives should cheer this aspect, even if they hate the result in this case. How a judge actually rules seems more important that what he or she says, in the abstract, outside the courtroom.

The obvious arguments are ripeness and exhaustion. Although the broad public-purpose decision was been rendered in 1999, it appears (?) that they could have and did bring more concrete, individualized arguments as to why their land should not be condemned for redevelopment before the city's administrative body right up to the actual condemnation date. Had they brought the claim in 2000. Indeed, it appears possible (though not likely) that an amendment to the plan brought by a third party might have spared their particular land without judicial interference.

For the redevelopment plan to be a pretext under Didden's theory of the case, the City would have had to have been prescient about the events of November 2003 (as described above) by July 14, 1999, when they approved the redevelopment plan that on its face would require the condemnation of the Didden property. I'm not sure what evidence would tend to show that the City's approval of the July 14, 1999 redevelopment plan was simply a pretext (or alternatively, that Wasser's proposal for the redevelopment plan was pretext for some extortion scheme). The subsequent condemnation was simply pursuant to that redevelopment plan - so the argument for pretext there is flat nonexistant.

I agree with this logic if the proper point in time we're looking at for the pretext analysis is 1999, rather than 2003. Of course, if we reach the merits, we're assuming that the SOL tolled until the decision was made actually to condemn under the Phase III development, not when the original plan was submitted to public inquiry. There's a strong case to be made, as David notes, that in 1999 Didden wouldn't have had a ripe claim.

If one believes that the SOL tolled in 1999, there seems to be at least a plausible case for pretext. (Given the vagueness of Kennedy's Kelo concurrence, it's hard to know what the standard is.) Port Chester commenced condemnation on 11/6/03, then approved Didden's CVS plan on 11/24/03, yet subsequently refused to withdraw the condemnation proceeding in at least two meetings.

Didden's complaint, according to the trial court, alleged "that [Port Chester] abused [its] condemnation powers in violation of Plaintiffs’ substantive due process rights under the Fourteenth Amendment" and that "Plaintiffs have been intentionally and unlawfully singled out and mistreated by Defendants in violation of the Equal Protection Clause" -- an allegation that sounds an awful lot like Justice Kennedy's "private transfers in which the risk of undetected impermissible favoritism of private parties is so acute that a presumption (rebuttable or otherwise) of invalidity is warranted under the Public Use Clause."

Reading the original trial court opinion, on the preliminary injunction motion, is a good example of the sausage-making that is local land use and development. Didden talks to CVS, but CVS isn't interested in Port Chester, presumably because this area of Port Chester has little to recommend it. So, Port Chester gives a developer a sweetheart deal, creates some land, and this part of Port Chester becomes attractive to CVS. The Developer apparently offers CVS Plots A (owned by somebody else) and B (owned by Didden), both inside the development area, but that's not big enough for CVS. Didden then offers CVS B (inside the development area) and C (outside the development area), which are big enough. Developer asks for a cut of the deal or offers to buy out C-the parties disagree. Either way, Didden refuses, Developer has B condemned, and Developer can point to how wonderful they are in saving Plot A inside the development area from disuse. And, of course, no drug store.

So, as I understand it, four federal judges looked at this. A federal trial judge appointed by Clinton granted the motion to dismiss. Then, a three-judge panel, including two GWB appointees, disposes of a case in an unsigned, unpublished per curiam opinion only four paragraphs long. Only one sentence even talks about the takings issue.

In other words, four judges from both sides of the aisle found that the claim was obviously bogus.

Yet we have a post and 50+ comments on "Judge Sonia Sotomayor's ruling in Didden"?

I am somewhat surprised/disappointed that Ilya hasn't addressed the specific factual inaccuracies in his post that I, and others, have pointed out. Unless this is simply because Ilya hasn't had time to do so (yet there are now three updates to the post), this is disappointing since the inaccuracies can be easily found by simply reading the District Court's opinion. Furthermore, Ilya repeats the same incorrect assertion in his 6:16pm comment.
It is a fairly important point since it pretty much completely undermines Ilya's argument that even if Wasser was telling the truth, his proposal was extortion. If Wasser was telling the truth (a big IF, I agree), then there hasn't been any extortion whatsoever in this case.

The District Court opinion is simply confused as to the statute of limitations. The Court thinks the statute starts running when you have knowledge of the facts that form the basis for injury. That principle only comes into play when the actual injury has occurred.

Challenging the taking as a pretext is in the nature of an as-applied challenge, rather than the facial challenge to the whole redevelopment ordinance that the court expected the plaintiffs to have brought.

The damage alleged did not occur until 2003. Asserting that the statute of limitations expired in 2002 is ludicrous.

The damage alleged did not occur until 2003. Asserting that the statute of limitations expired in 2002 is ludicrous.

Considering many judges have concurred with such a judgment, I'd say run to the court if you get notified that your property may be subject to condemnation instead of waiting for them to actually seize it. :)

In any case, even potential condemnation reduces the chances of selling the property to anybody whose plans for the property are not aligned with the redevelopment plan. If the number of potential purchasers are reduced, most likely the value of the property is reduced as well, so the damage occurs when a plan is announced if there is a damage. Therefore, it is not outlandish that the statute of limitations should start when the plans are publicized. I guess that does not fit Prof. Somin's argument that property rights are not protected as much as other constitutional rights or the desire to dislike the new Supreme Court nominee.

**1 Plaintiffs-Appellants appeal from a May 24, 2004 decision and order of the United States District Court for the Southern District of New York (Colleen McMahon, J.) dismissing their complaint alleging various constitutional violations under 42 U.S.C. § 1983 against the Village of Port Chester and others. We assume the parties' familiarity with the facts and procedural history in this case. We review the District Court's decision to grant a motion to dismiss a complaint pursuant to Fed.R.Civ.P. 12(b)(6) de novo. Taylor v. Vermont Dep't of Educ., 313 F.3d 768, 776 (2d Cir.2002).

In April 1998, Defendant-Appellee G &S Port Chester, LLC, (“G &S”), entered into a development agreement with Defendant-Appellee Village of Port Chester that named G &S as the designated developer of a marina redevelopment project. On July 14, 1999, after a public hearing, the Defendant-Appellee Village Board of Trustees adopted a resolution in which it made a finding of public purpose for condemnation of the properties located in the redevelopment district. In March 2003, Appellants discussed with representatives of a pharmacy chain the possibility of constructing a pharmacy on their property. A portion of Appellants' property adjoined *933 the redevelopment district and another portion lay within the redevelopment district. According to Appellants, at a November 2003 negotiation session with Defendants-Appellees G &S and Wasser, Wasser demanded $800,000 from them in order to avert a condemnation proceeding of their property within the redevelopment district, and offered to allow them to proceed if Defendants-Appellees were given a partnership interest in the project. Appellants refused both demands and, two days later, they received a petition seeking to condemn their property. On appeal, Appellants advance constitutional claims based on the Fifth and Fourteenth Amendments asserting, inter alia, that they have a right “not to have their property taken by the State through the power of eminent domain for a private use, regardless of whether just compensation is given.”

[1] KeyCite Citing References for this Headnote The statute of limitations applicable to § 1983 claims in New York is three years. Patterson v. County of Oneida, 375 F.3d 206, 225 (2d Cir.2004). “While state law supplies the statute of limitations for claims under § 1983, federal law determines when a federal claim accrues.” Connolly v. McCall, 254 F.3d 36, 41 (2d Cir.2001). Under federal law “a cause of action generally accrues ‘when the plaintiff knows or has reason to know of the injury that is the basis of the action.’ ” M.D. v. Southington Bd. of Educ., 334 F.3d 217, 221 (2d Cir.2003) (quoting Leon v. Murphy, 988 F.2d 303, 309 (2d Cir.1993)). Appellants had reason to know of the basis of their injury when the Board announced its public purpose finding on July 14, 1999. Appellants, however, brought suit in January 2004, more than three years after the date their claims accrued, and thus their claims are time-barred. We reject Appellants' contention that their injury actually accrued in November 2003 when G &S and Wasser “first utilized their de facto eminent domain power against [them] in an effort to exact a cash payment or partnership interest” in the pharmacy project.

**2 [2] KeyCite Citing References for this Headnote Moreover, even if Appellants' claims were not time-barred, to the extent that they assert that the Takings Clause prevents the State from condemning their property for a private use within a redevelopment district, regardless of whether they have been provided with just compensation, the recent Supreme Court decision in Kelo v. City of New London, 545 U.S. 469, 125 S.Ct. 2655, 162 L.Ed.2d 439 (2005), obliges us to conclude that they have articulated no basis upon which relief can be granted. See id. at 2668 (“Just as we decline to second-guess the City's considered judgments about the efficacy of its development plan, we also decline to second-guess the City's determinations as to what lands it needs to acquire in order to effectuate the project.”); see also Rosenthal &Rosenthal Inc. v. New York State Urban Dev. Corp., 771 F.2d 44, 46 (2d Cir.1985). Finally, we agree with the district court that Appellees' voluntary attempts to resolve Appellants' demands was neither an unconstitutional exaction in the form of extortion nor an equal protection violation.

The district court properly dismissed the complaint on the ground that the Appellants' claims are time-barred. Accordingly, the judgment of the district court is hereby AFFIRMED.

under Rule 12(b)(6), a court must assume - for purposes of ruling on the motion - that the plaintiff's version of the facts is true unless it can be proven false beyond doubt.

This is not the standard of review for a 12(b)(6) motion. There's no question on a 12(b)(6) motion of either evidence or proof. Rather, it tests the sufficiency of the complaint, taking the facts alleged in the complaint in the light most favorable to the plaintiff.

Considering many judges have concurred with such a judgment, I'd say run to the court if you get notified that your property may be subject to condemnation instead of waiting for them to actually seize it. :)

I don't see how you can. Suppose at that time, the courts hold that the condemnation is appropriate. Later, when they actually do condemn it, can you challenge that action?

Neither a yes answer nor a no answer makes any sense.

If yes, what was the point of the first proceeding? It's wasteful of resources and seeks to avoid a future harm that may never occur.

If no, what if circumstances change?

Sorry, the judges simply got it wrong. The SOL cannot start running before the injury occurs. And the SOL certainly can't cover actions that took place after the SOL ran out. The SOL certainly can't have run out before an injury of any kind was even highly probable.

Doesn't this case turn on whether the plan as a whole requires a public purpose, or whether each taking requires a public purpose?

It seems, grossly sumarizing, that the village delegated the authority to Wasser to engage in condemnations pursuant to a development plan with a public purpose, and Wasser was expected to exercise that authority in a way that would maximize his profit as a developer.

As I said before, as soon as your property is publicly and officially announced as potentially subject to condemnation, it loses a lot of its flexibility. If there is damage, it happens immediately. Besides, in this instance the property owner is not really claiming any damages, as he is financially compensated already and he is not disputing the amount he received. He is claiming that this is not a public purpose. Well, guess what, the government announced its plans more than three years ago and SOL has run its course.

In any case, if you still believe district court and the appeals panel got it wrong, feel free to wait until your property is actually taken before claiming that this is not for a public purpose. I doubt you'll get your way.

As I said before, as soon as your property is publicly and officially announced as potentially subject to condemnation, it loses a lot of its flexibility. If there is damage, it happens immediately.

Assuming that it's damage, it's not cognizable damage. All property is "potentially subject to condemnation," and the government announcing that it is considering taking a particular parcel is not a taking. (Hell, according to the Supreme Court, even an outright ban on development isn't a taking, as long as the government labels it a "moratorium" rather than a ban.)

Besides, in this instance the property owner is not really claiming any damages, as he is financially compensated already and he is not disputing the amount he received. He is claiming that this is not a public purpose. Well, guess what, the government announced its plans more than three years ago and SOL has run its course.

The government announced potential plans more than three years ago. It did not announce actual plans. What if the government in 1999 announces the redevelopment plan, but in 2004 takes the land to build a military base? What if the government in 1999 announces the redevelopment plan, but never takes the property at all because the developer goes out of business? It simply makes no sense to claim that the plaintiff should have sued in 1999, when nothing had happened to him in 1999.

Besides, in this instance the property owner is not really claiming any damages, as he is financially compensated already and he is not disputing the amount he received. He is claiming that this is not a public purpose. Well, guess what, the government announced its plans more than three years ago and SOL has run its course.

The injury he is seeking redress for is the taking itself. His grounds for challenging the taking are the lack of a legitimate public purpose.

If I say "I'm going to hit you over the hammer some time in the next few days", and you believe me, injuries may flow from that threat. The SOL on injuries from that threat surely runs from the day I make the threat. But later, if I hit you over the hammer, a new SOL runs for the injuries from the actual hitting.

The taking must be for a public purpose on the day it occurs. That it would have been for a public purpose had it occurred a year ago is irrelevant.

Or consider it this way -- suppose there was a legitimate public purpose for many years. But weeks for the taking, the purpose evaporates due to other events. Can the taking still go on because the SOL on challenging the purpose ran out?

1) Announce a redevelopment plan for an area, without any specific takings or sufficient detail to predict such takings.
2) Wait for the SOL to expire.
3) Any property owners that did not successfully challenge the purpose (through inaction, lack of injury or other failure) are now barred from challenging the takings.

The SOL issue is fairly debatable (it's certainly being debated here, anyway), but it seems enough to conclude that the ruling is only tangentially related to ED. Makes the case a lot more boring and less sexy, Constitutionally speaking. Kind of a letdown after all the hype.

But weeks for the taking, the purpose evaporates due to other events. Can the taking still go on because the SOL on challenging the purpose ran out?

Did the plaintiff argue that the purpose has evaporated? No. Therefore, it is not possible to tell how the judges would decide in such a case.

The local government declares a public purpose along with a redevelopment plan. Then, it starts the environmental impact reports, negotiates with all the applicable parties, starts building the infrastructure etc. People should be able to sue over parts of that development, whether a road should pass here or a building should be two stories high instead of three or whatever, as the specific parts of the plan becomes final, but it makes sense that SOL starts running out for the initial public purpose finding.

Did the plaintiff argue that the purpose has evaporated? No. Therefore, it is not possible to tell how the judges would decide in such a case.

You miss my point. In this case, the purpose did not evaporate. But there was no way anyone could have determined that at the time you're claiming the SOL started running. Essentially, you are arguing that at the time the SOL starts running, he has to predict that the purpose will not evaporate before the taking.

The local government declares a public purpose along with a redevelopment plan. Then, it starts the environmental impact reports, negotiates with all the applicable parties, starts building the infrastructure etc.

None of which creates the injury for which redress is sought here.

People should be able to sue over parts of that development, whether a road should pass here or a building should be two stories high instead of three or whatever, as the specific parts of the plan becomes final, but it makes sense that SOL starts running out for the initial public purpose finding.

Sure, the SOL on injury that flows from that finding. But how can the SOL on injury that flows from a decision to condemn start before that decision is made?

Sorry that I keep dwelling on it, but I am very disappointed that it took Mr. Hemel's email to make Ilya issue an update 4 and that Ilya still cannot admit that he was wrong.

It is only in the most literal sense true that Didden would have "lost" $2.975 million had he agreed to the proposal. The $2M figure was just an estimate of the profits, and further, the land's value may well have gone down (or up). Thus, the alleged "loss" is a very misleading number.
Second, as someone has pointed out previously, Wasser didn't have to negotiate at all. Thus, it by definition, cannot be an extortion: if he refused to do any negotiation with Didden and simply condemned the land (as was within the village's rights) and used his designation as the "preferred developer, he would have gotten the $2M profit (assuming his estimates were correct). Instead, he offered either to pay about 800K plus the fair value of the land (i.e. around 1.775M) or be paid $800K. Where's the extortion?? Wasser was the preferred developer chosen by the village; his development plan seems more beneficial to the village; and he offered a very generous deal to the parties whose land was designated to be condemned.The more I think about the case, the more balance of equities tips in Wasser's favor. Thus, Ilya is wrong again when he states that "everyone agrees" that the offer of being paid $800K was an extortion.

Tugh:
One difference, though, is that CVS was willing to deal with Didden, but not the Developer. Thus, the $2M isn't relevant because part of Didden's property was outside the development area and not subject to condemnation. Instead, they ended up with a Walgreens, with an expected value of at least $800k (the value of Developer's offer).

As another way of looking at it, there are three possible results:
1. Didden's property (Parcels B and C) is not part of the development area. Didden owns his land and the CVS is developed. Result: Didden nets $2M from the CVS development and continues to own parcels B and C. Parcel A inside the development area is not developed.
2. Didden's Parcel B is inside the development area. Didden pays Developer $800K to have parcel B removed from the development area. Didden develops the CVS. Result: Developer gets $800k, Didden gets $1.2M and continues to own Parcels B and C. Parcel A is not developed. Difference from my #1: $800k is transferred from Didden to Developer because of Developer's municipally-granted interested in the development area.
3. Didden accepts Developer's offer to sell the real estate (both B and C) for its value plus $800k. Result: Didden gets $800k, Developer develops the CVS and nets $1.2M. Developer owns Parcels A and B. Parcel A is not developed.
Differences from my #2: Ownership of Parcels B and C transfers to Developer. $400k of value from the CVS development goes from Didden to Developer. This may reflect uncertainty relating to the $2M expected from the CVS, or it may not.
4. Didden refuses to deal with Developer, so Developer condemns Parcel B and builds a Walgreens on Parcels A and B. Result: Developer gets $? from the Walgreens and owns Parcel A and B. Didden continues to own Parcel C but otherwise gets nothing.
Differences: What the Walgreens is worth isn't clear-Developer's offer to pay $800k to Didden may indicate about $1.2M. In that case we'd have lost $800k of value by virtue of Parcel A's inclusion in the development area and Parcel C's exclusion.

Related HYPO #1: What if the development area was amended to include Parcel C after CVS rejected Parcels A+B and accepted Parcels B+C? Does Didden then have a claim? If so, is the claim for the full amount, a pro rata portion based on comparative sizes of Parcels B and C, or the difference from a drug store on Parcels B and C instead of Parcels A and B? Does this un-toll the statute of limitations w/r/t Parcel B?
Related HYPO #2: From example #1 to #2, we see that the private institution of a publicly-approved development area resulted in a wealth transfer of $800k from private party A to private party B. What's the key factor here? Does it make a difference if the party being paid $800k is the Village instead of the Developer? What if the $800k paid to the Village is then put in a fund for the Developer? Where, if anywhere, do you run into a pretextual takings issue?